The American Bar Association (ABA) defines probate as:
“The court supervised process of proving the validity of a will and distributing property under the terms of the will or in accordance with a state’s intestacy law in the absence of a will.”
In plain terms, it is the court process of distributing property belonging to someone who has recently passed away. When a person passes without a Will and/or Trust, he or she has passed intestate. In such a situation, control of the property will be assumed by the court until a beneficiary is found and the property is correctly transferred. This probate process can often be costly and time consuming. There are many good probate-avoidance techniques, but which one is right for you and your family?
Living trusts are probably the best-known way to avoid subjecting your family to the hassle and expense of probate court proceedings after your death. But there are many other probate-avoidance methods, which you can use in addition to or even instead of a living trust.
Here are some easy-to-use methods of avoiding probate for different kinds of assets.
Living Trust
A trust created by an individual during his or her lifetime, typically as a revocable trust. Also referred to as an “inter vivos” trust, “revocable living trust” or “loving trust.” A Revocable Trust is a trust created during lifetime over which the grantor reserves the right to terminate, revoke, modify, or amend. The living trust is the most common way to designate beneficiaries of real estate and other property. The reason many attorneys recommend this solution is because of its ability to be updated and changed as your life changes. Life changing events such as deaths, births, adoptions, real estate purchases, and inheritance are all reasons to update your Trust. A Living Trust allows you to make those updates easily.
Joint Ownership
If you own property jointly with someone else, and this ownership includes the “right of survivorship,” then the surviving owner automatically owns the property when the other owner dies. No probate will be necessary to transfer the property, although of course it will take some paperwork to show that title to the property is held solely by the surviving owner. There are two common forms of joint ownership.
- Joint tenancy. Property owned in joint tenancy automatically passes to the surviving owners when one owner dies. No probate is necessary. Joint tenancy often works well when couples (married or not) acquire real estate, vehicles, bank accounts or other valuable property together. In California, each owner, called a joint tenant, must own an equal share.
- Community property with right of survivorship. California is a community property state, which means that spouses and registered domestic partners generally own all property acquired during the marriage jointly unless they take steps to keep it separate. If spouses or partners hold title to an asset as community property with the right of survivorship, then it automatically passes to the survivor when one spouse or partner dies.
Joint Ownership may not be right for you. Whereas joint ownership passes ownership to a surviving spouse, it does not instruct the court or your family on inheritance after the surviving spouse passes. When, God forbid, a couple passes simultaneously, the property not held in a Living Trust or other probate avoiding method is considered intestate and must proceed through the probate process.
Combining Probate Avoidance
A couple may use both Joint Ownership and a Living Trust to protect their property and investments. Many times we recommend couples hold property as community property as a first protection and then prepare a Living Trust that instructs an executor of the estate on how inheritance shall be distributed. This is especially important to families with children, grandchildren, and multiple real properties.
These methods are only two ways to avoid probate but there are many different tools and methods to protect all that you and your family have worked hard to earn and keep. Each family’s situation is unique and may call for a different approach and the attorneys at Gallinger Law are experienced and ready to assist you.
For those who practice Islam, there are religious doctrine that guide inheritance. Please visit www.IslamicLegalPlanning.com for more information and help with an Islamic Living Trust.